We all need a quick financial detox before Christmas. December is approaching like a freight train, with friends, family and festivities already becoming part of the journey, while we deal with the empty pockets, fridges and fuel tanks so typical of this time of year.
A detox does not have to relate to your physical health only. You can have a financial detox as part of a financial ‘course correction’, says Farzana Botha, segment manager at Sanlam Risk and Savings.
“We have all experienced that Januworry moment of an empty bank account and that sinking feeling that payday is very far away before. Typically, most people’s paycheques must last for six weeks and cover a myriad extra expenses, from presents and gatherings to travel and school supplies.
“Even consumers who are lucky enough to receive a bonus may struggle. To avoid starting the new year with debt, it is critical to manage your money well and course correct before the festive ‘binge’.”
Getting your budget back on track before festive overspending takes discipline, but Botha has these tips to course correct and stop the spend:
A budget ‘cleanse’: Consider implementing a short-term, corrective budget to course correct. Think of it like a detox after a massive meal. Review your budget to drastically cut down on non-essentials to get back on track. Take the time to work through your bank statements and look at every line. Be ruthless about eliminating what you do not need. Consider a budgeting tool that works for you, like zero-based budgeting, the ’50-30-20’ method or cash-stuffing.
Talk about it: There is something very cathartic about ‘coming clean’ to your family and friends about where you are financially. Chances are that they feel the pinch too. Share your savings hacks and budgeting goals to keep each other accountable. Often, we feel the need to keep up appearances. It can be very refreshing, even affirming, to be honest with and supportive of each other.
Assess your debt: Credit card debt can stack up exponentially over December. Honestly assess your debt and plan to pay back what you can as soon as possible. Look for ways to pay more than the minimal monthly instalments and consider the ‘snowball’ strategy of paying off the smallest debt first to free up funds for the next smallest debt and so on.
Hack your spending: What spending behaviours are undermining your long-term goals or leading to unnecessary spending? Go through your statements to categorise expenditure and look for patterns like regular trips to the grocery store or sneaky online sales shopping. Once you see the habits, you can start to change them, such as eating in more regularly, packing lunches for work and buying in bulk when you can.
Maximise your rewards programmes: You probably have rewards programmes with your bank or insurer that offer vouchers and discounts at retailers. Make sure you are aware of these benefits and actively take advantage of them. Many retailers also offer rewards ‘stamps’ or points that accumulate to offer significant savings.
Long-term, realistic budgeting: Once you are back on track, review your monthly budget and ensure it includes long-term goals such as your retirement planning and building up an emergency fund for those unexpected curveballs.
Start planning for December in January: Plan ahead to avoid feeling the Januworry pinch again. If you can, resolve to save something each month in a special ‘December 2024’ interest-earning account or stokvel to ensure you are ready for the festive season next year. Consider buying your gifts throughout the year, rather than panic buying expensive items the day before. That way, you can also capitalise on seasonal sales as 2024 unfolds.
“You might have to endure some short-term ‘pain’ as you rein in the spending to get back on track and most importantly, feel in control again. A budget ‘cleanse’ can be the best way to start addressing debt, break bad habits and purge the December splurge.